Shares of HP jumped on Thursday after conglomerate Berkshire Hathaway disclosed an 11.4% stake in the PC and printer maker. HPQ stock rose nearly 15% on the news.
Late Wednesday, Berkshire Hathaway, led by billionaire investor Warren Buffett, disclosed that it has purchased nearly 121 million shares of HP. That stake was worth about $4.2 billion, based on the closing price of HPQ stock on Wednesday, Reuters said.
On the stock market today, HPQ stock leapt 14.8% to close at 40.06. Earlier in the session, it hit an all-time high of 41.47.
Evercore ISI analyst Amit Daryanani on Thursday reiterated his outperform rating on HPQ stock with a price target of 43.
HPQ Stock Was Recent Breakout
Berkshire's investment is a validation of HP's strategy and capital return program, Daryanani said in a note to clients. Berkshire began acquiring HPQ stock after the company announced a $3.3 billion acquisition of enterprise headset maker Poly. That deal will bolster its growing peripherals business.
On March 25, HPQ stock broke out of a double-bottom base at a buy point of 39.71, according to IBD MarketSmith charts. It notched a then-record high of 40.37 on March 30 before retreating in a turbulent market.
HPQ stock triggered a stop-loss sell rule on March 31 when it fell 7% to 8% below the buy point. That day, it also undercut its 50-day moving average line, a negative sign.
HP shares have been under pressure in recent weeks over concerns about slowing PC demand and a pullback in consumer spending.
Berkshire Hathaway is looking to replicate the success it has had with another consumer electronics company, Apple, JPMorgan analyst Samik Chatterjee said in a note to clients. Berkshire started buying Apple stock in 2016 when it was beaten down by concerns about slowing smartphone growth, he said.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
